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Employee Communications

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Employee share schemes are used to help recruit, retain and motivate staff and further corporate objectives. However, if the arrangements are to be effective then the potential benefits must be properly understood and appreciated by the participants. The way in which this is done will depend on the individual company and on the nature of the plan. The communication effort required for an all-employee scheme will clearly be on a larger scale than that required for the issue of options to just one or two key employees.

All documents to be supplied to employees in the context of a Share Incentive Plan (SIP) must be submitted to HM Revenue & Customs as part of the approval process. In other cases the documents need not be submitted but they should carry a statement to the effect that in the event of any conflict the scheme rules and legislation take precedence and references made to taxation consequences are for guidance only.

A publicity campaign

For all-employee schemes, in particular, it may be helpful to build pre-launch interest and excitement through posters, flyers, payslip inserts and similar methods. The company may also consider making one or more press releases, or persuading a local paper to run a feature about the scheme. If the company publishes an internal newsletter, this also provides an obvious opportunity for publicising the scheme.

Explanatory literature

This should contain the main terms of the scheme and explain its benefits in accessible language and in a FAQ style that befits the culture of the business. The skills of the workforce will need to be taken into account, and the use of specialist accounting or legal terms should be avoided in most cases. However, the documents must be technically accurate. They will also need to include certain statutory declarations, depending on the nature of the scheme(s) being introduced.

Face to face presentation

Face to face meetings are often the most effective communication method. In a share option scheme there may be only a handful of recipients, in which case individual presentations can take place. For large option schemes, or all-employee share schemes, group presentations will be required. A good audience size for each session is 20 to 30, since this allows those who have genuine questions to ask them but reduces the chances of a single member of staff monopolising the proceedings. Senior staff will also tend to act as “opinion formers” within the organisation and be tasked with cascading information. If the presenters include an external adviser, employees may feel that the whole exercise is more genuine. This will also ensure that any technical questions can be addressed at that time.

Intranet/extranet sites

Software is now available which allows employers to post share scheme information on the internal computer network, or on an external website. Employees are issued with passwords so that they can access their personal award details. Some software allows employees to model “what-if” scenarios, for example to see the value of their share options under different scenarios.

RM2 can provide Web Portals to aid online access to plan informations and administration.

Continued communication

The employer should make plans to refresh and reinforce the message at regular intervals. Good opportunities for this are when dividends are payable on employee shares, when shares are revalued prior to a further award allocation, or on finalisation of the audited accounts.

Employees who own company shares are entitled to receive the company’s report and accounts each year. The accounts they receive need be no more detailed than those available on the public record at Companies House.

RM2 will work with you to delivery appropriate employee communications, using your branding and house style to optimise employee engagement. This might include FAQs, presentations, employee poll surveys, dedicated email and telephone helplines.

 
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